Where Does Namaste Technologies Go From Here?

Where Does Namaste Technologies Go From Here?

Last week, Namaste Technologies Inc. (N.V) (NXTTF) released second quarter financial results for the period that ended on May 31st and we were impressed with how it was able to grow revenues on a quarter-over-quarter basis.

When compared to the prior quarter, Namaste recorded an improvement in second quarter revenue, gross margin and the net loss. The company continues to execute on previously announced initiatives, and we are favorable on the performance of the business during the toughest months of the COVID pandemic.

The most attractive aspect of the Namaste story is related to CannMart, which is a wholly owned subsidiary of the business. CannMart continues to execute on a strategy to attract premium brands, value added suppliers, and provincial agencies. Much of the success can be attributed to its expertise in e-commerce, production, packaging, and distribution, and we are bullish on the growth prospects that are associated with the subsidiary.

During the second quarter, CannMart’s expanded product catalogue grew in both its business to business (B2B) and business to consumer (B2C) channels and this is a trend that we are bullish on. CannMart continues to put a major emphasis on strengthening its competitive position in the Canadian cannabis industry as the market matures and shifts into consumer-packaged goods (CPG).

Namaste is led by a management team that has a proven track record of success working in the CPG market. We believe that the team is focused on bringing the business down a path to profitability and will be monitoring how it continues to execute on this. Going forward, we expect to see a continued focus on building a leading Canadian cannabis company and believe that the market underappreciates the potential that is associated with this.

During the quarter, Namaste reported to have generated $6.9 million of revenue and this represents a more than 70% increase over the same period last year. CannMart accounted for more than $2.4 million of the quarterly revenue and we expect this vertical to continue to record impressive growth on a going forward basis.

An important metric from the quarterly results is related to the amount of cannabis products that were sold during the period. Going forward, we expect this metric to resonate with the market and are favorable on the way the business has evolved. In the second quarter, more than 33% of second quarter revenue was derived from cannabis and cannabis products which is substantially higher than the less than 5% that was recorded in the same period last year.

From a balance sheet standpoint, Namaste is well positioned to capitalize on organic and inorganic growth initiatives, and we are favorable on how the management team has been able to manage expenses. At current levels, we believe that Namaste has a compelling valuation and a favorable risk-reward profile. We believe that the company has significant potential catalysts for growth and is an opportunity to be aware of.


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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

Published at Wed, 29 Jul 2020 11:32:02 +0000